GOOGL

Apple Handed Huge Tax Bill; We’re Not Worried

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By Kris Rosemann The Competition Commission of the European Union has ordered Apple (AAPL) to pay up to ~$14.5 billion in back taxes plus interest to the government of Ireland after concluding that the country unjustly allowed the firm to pay an effective corporate tax rate between 0.005% in 2014 and 1% in 2003 on its European profits. The total amount deemed owed by the EU is 40 times the largest amount previously demanded in such a case. While $14.5 billion is certainly a meaningful sum of cash, if there is a company equipped to handle such a situation, it is Apple. As of the end of the third quarter of its fiscal 2016, it had ~$231.5 billion in cash, … Read more

Pop the Bubbly? Everyone Is Getting Rich

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Image Source: Bryan Rosengrant “Imagine a bank that pays negative interest. In this upside-down world, borrowers get paid and savers penalized. Crazy as it sounds, several of Europe’s central banks cut key interest rates below zero in 2014, and now Japan has followed…some 500 million people in a quarter of the world economy (are) living with rates in the red.” — Bloomberg By Brian Nelson, CFA In April 1979, Paul Volcker became the Chairman of the Federal Reserve, and after a series of rate hikes, the federal funds rate reached a high of 20 points by the end of the year and into 1980. Though the move was to combat double-digit inflation at the time, it’s worth pondering what such … Read more

Alphabet Accelerates in Second Quarter

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By Kris Rosemann Shares of Best Ideas Newsletter portfolio holding Alphabet (GOOG, GOOGL) have caught an updraft after the firm reported a strong second quarter of 2016 after the close July 28. Revenue growth accelerated to 21% from the year-ago period, led by above-average growth in Google websites revenue (+24%) and Google other revenues (+33%). The solid performance in other revenues (up to $2.2 billion) was driven by growth in the Google Cloud Platform, as well as in Google Apps and Google Play. Alphabet also did well in driving bottom-line expansion through improved operating margins; its non-GAAP operating margin grew to 35% from 34% in the second quarter of 2015. This helped non-GAAP diluted earnings per share jump to $8.42 from … Read more

Apple Beats Expectations, Excitement for Future Drives Shares Higher

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By Kris Rosemann Tech giant and holding in both newsletter portfolios Apple (AAPL) reported sharp drop-offs in both its top and bottom lines in its fiscal third quarter on a year-over-year basis July 26, but its shares have surged back into triple digits ($100+) since then thanks in part to stronger than expected customer demand driving reported results past expectations. Revenue fell more than 14% in the quarter, and diluted earnings per share dropped 23% from the year-ago period as iPhone unit sell-through was down 8% from the third quarter of fiscal 2015. Though this 8% drop is not appealing on an absolute level, it is better than what the firm was expecting, and continued improvement is anticipated as we … Read more

Part III: Nelson’s Evaluation of Berkshire’s 2015 Annual Report

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<< Go back to Part I << Go back to Part II By Brian Nelson, CFA It’s always a wonder to open up on the Berkshire Hathaway (BRK.A, BRK.B) annual report for a large variety of different reasons, but every time I do I can’t help but ponder yesteryear through the table on page 2, “Berkshire’s Performance vs. the S&P 500.” I think I have a unique knack for imagining what might have been if today’s standards would have been applied to Berkshire in the 1970s, perhaps in some ways how many baseball fans may think about whether the legends of the past would have put up the type of numbers that they did if presented with today’s dynamics. For … Read more

Since 2014: Microsoft Up ~50%; Alphabet Up ~30%, Visa Up ~40%

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Image Source: Brandon Martin-Anderson The past few weeks have been difficult ones for the newsletter portfolios. Sure, we’ve had some great reports from Hasbro (HAS) and Union Pacific (UNP), but the broad performance of some of our high-profile holdings hasn’t been what we’ve grown accustomed to. We’ve been concerned about the market’s “fluff” for some time, but equities have been racing ahead in any case, mostly in light of expectations for ongoing delays in continued contractionary monetary policy by the Fed, so the sluggish reports weren’t exactly what we were looking for to end the week. On Friday, April 22, we were “hit” with three rather glum quarterly reports from Microsoft (MSFT), Google – now known as Alphabet (GOOG, GOOGL), … Read more

Netflix Shareholders Need to Get Real?

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By Brian Nelson, CFA “Netflix is valued as if it will have the economics of three US operations, without having to pay at all for the next two…” We have no problems with investors playing with “fire” if they know that they are and don’t mind losing their shirts, but we posit that, given the popularity of the acronym, FANG, which stands for Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google, now Alphabet (GOOG, GOOGL), many unsuspecting investors have been lured into Netflix believing these four companies share similar qualities. They absolutely 100% do not. On one hand, Facebook, Amazon, and Alphabet have incredibly strong balance sheets and generate copious amounts of free cash flow, as measured by cash flow … Read more

Alert: 5 Reasons Why We Think Netflix’s Shares Will Collapse

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Pictured: The “black space” a Netflix user encounters after searching for movies that include one of Hollywood’s biggest superstars, Jennifer Lawrence. By Brian Nelson, CFA Netflix’s (NFLX) shares are considerably vulnerable. The content distributor’s business model is in jeopardy in light of rising cash content costs amid a subpar product offering, and we don’t believe there is an easy answer to its woes — either ever-higher cash streaming content costs will obliterate equity value over the long haul despite member growth, or a cut in such necessary cash content obligations will hurt its streaming product assortment and therefore member growth and subscriber retention. We’re pointing investors to the low end of the fair value estimate range for shares, the low-$60s, but we believe there may be further downside … Read more

Google…Ahem…Alphabet!

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“A falling stock price doesn’t mean the stock is cheaper; it doesn’t mean that the stock will go back up; and it certainly doesn’t mean that the stock can’t fall further. In some cases, a falling stock can become more expensive as it drops, if its value falls by a greater amount.” – Brian Nelson, CFA The company formerly known as Google, Alphabet (GOOG, GOOGL), is surging in after-hours trading February 1. As a result of Google’s stock split in 2014, we include both share classes (non-voting Class C, GOOG, and Class A, GOOGL) in the Best Ideas Newsletter portfolio, collectively one of its largest holdings (5%+). Alphabet, then known as Google, first registered a 10 on the Valuentum Buying … Read more

Leading Investors to Water…

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“Entrepreneurs are never satisfied. They want to do things better. They strive for perfection and use all the ingenuity to their command to achieve it.” – J.W. Marriott Company Name Symbol YTD % Outperform? Apple AAPL 7.84 Y Alibaba BABA -18.37 N Altria MO 18.75 Y Cisco CSCO -1.2 N eBay EBAY 24.26 Y Financial Select SPDR XLF 1.52 N General Electric GE 20.66 Y Gilead Sciences GILD 10.41 Y Google (now Alphabet) GOOG 46.07 Y Google (now Alphabet) GOOGL 46.84 Y Health Care ETF XLV 6.02 Y Intel INTC -3.73 N SPDR S&P Bank ETF KBE 9.25 Y Republic Services RSG 10.09 Y Rio Tinto RIO -31.07 N Teva Pharma TEVA 16.12 Y Union Pacific UNP -32.46 N Utilities … Read more